Anybody Here Own LTC (Long Term Care)

[2B]

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Originally Posted by honobob Question to the self insurers?* How much of your portfolio could you commit to LTC and still provide FIRE* for the healthy spouse?* Do you self insure your car or your house?* Seems like the payout to insure a $25-45,000 car for collision or a $100K-300K house would be way larger when you compare the return and the risk.* I think I have better odds of needing LTC than having to replace a car or my house.

With the limits I've seen on LTC insurance, I'd only be insuring for for a potential coverage of $100-150K. *Insuring a car or house is more about liability in my opinion than the basic asset value. *I don't have comp on my cars and I have the largest deductible available for my house. *I consider both of these insurance products necessary "rip offs" I'm not willing to take the liability risk without.

The world is filled with exceptions but the typical person we've "met" in my in-laws' nursing/assisted living facility is widowed and safely over 80. * My in-laws are a major exception although not the only ones there with living spouses. * Most of the people their age are dead. *They are just living longer than the quality of their life.

As I said in an earlier post, their pensions and SS security would just about cover either one of them. *The added cost is for the care of the other. *What's interesting is that its about the same as what my FIL was spending living on his own before his Alzheimher's became an independence ending affliction.

This has them eating into their assets at the rate of about $50K per year until one of them dies. *That's what the money is for. *Neither one of them is going to get out of that facility alive. *Neither one has any chance of going on the "vacation of a lifetime." *They are there and will remain until the funeral. *Statistics say they should both be dead by now. *Statistics say they won't live much longer but statistics only talk about likelyhoods and not actuality.

I suspect that most of the other residents of their facility are in similar financial shape. *If there is only one person, the amount of money needed to supplement their SS and pensions is not going to require many assets to last the rest of their lives.

Here are the questions for the insured. *How much could your "self insurance" fund grow to if you created a separate account? *What will you do after paying for insurance for 20 years when your renewal raises your payment by 300%? *What will you do after your 2 or 3 year limitation for benefits are all used up? *

[REWahoo]

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Originally Posted by 2B Here are the questions for the insured. How much could your "self insurance" fund grow to if you created a separate account? What will you do after paying for insurance for 20 years when your renewal raises your payment by 300%? What will you do after your 2 or 3 year limitation for benefits are all used up?

Good questions. The only reason we bought LTC insurance was the premiums for DW and I totalled less than $100 per month and they were guaranteed not to change for 10 years. If we invested the premium payment over the 10 year period, it might total enough to pay for 3-4 months of care for one of us.

Once the premiums go up. then the equation will change. I will have to take an entirely new look at whether or not we will keep LTC coverage for either of us.

[2B]

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Originally Posted by REWahoo! Once the premiums go up. then the equation will change. I will have to take an entirely new look at whether or not we will keep LTC coverage for either of us.

Unfortunately, insurance companies and their actuaries know far more about us that we do ourselves.* They are playing the odds with the payout heavily in their favor.* It is very rare for someone under 70 to need extensive LTC (note the common 6 month exclusion).* Some do and I've seen several people with advanced Alzheimer's under 70.* That could be a 10 year plus LTC stay (hence the limited length of benefits).

The question with insurance is always whether you can handle the risk without it.* If you can, you almost are always financially better off to do so.*

When it comes to renewing, physicals are often required. If you look good, your rates will stay reasonably low but you won't get $100 per month again. As your health declines, the rates explode. I suspect you were under 55 to get a 10 year policy. I also suspect you had a physical when you got it.
*

[honobob]

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Originally Posted by 2B With the limits I've seen on LTC insurance, I'd only be insuring for for a potential coverage of $100-150K. *Insuring a car or house is more about liability in my opinion than the basic asset value. * Quote: Originally Posted by 2B Sorry, I thought I was clear about excluding liability. *And the thing about car/ house insurance is that if you wreck your car you can ride the bus till you decide to replace and even if the house burns down you can get a mortgage to rebuild/sell the land/live in a yurt for awhile but if you're in LTC they go for the liquid assets first and proceed from there.* I also could have bought 2 year coverage but lifetime seemed better. *CalPers has good reputation so I really didn't check much further but thought all insurers provided lifetime option. Quote: Originally Posted by 2B The world is filled with exceptions but the typical person we've "met" in my in-laws' nursing/assisted living facility is widowed and safely over 80. * My in-laws are a major exception although not the only ones there with living spouses. * Most of the people their age are dead. *They are just living longer than the quality of their life. Quote: Originally Posted by 2B Possibily these 80 year olds had a spouse that was in LTC but predeceased. *You're also comparing 80 yo now *to 50 somethings who are more likely to be 95 in LTC Quote: Originally Posted by 2B As I said in an earlier post, their pensions and SS security would just about cover either one of them. *The added cost is for the care of the other. *What's interesting is that its about the same as what my FIL was spending living on his own before his Alzheimher's became an independence ending affliction. Quote: Originally Posted by 2B But isn't our group people who are taking small if any pensions, and not maxing their SS benefits to RE? *My dad FIRE at 52 and pension was $429mo plus $715 SS. *That barely paid his daycare. *If he'd spent his 8 years in a nursing home he would have depleted all his assets within 6 years at 75 years of age! *At 69 just prior to his problems he had enough to live a very comfortable life to his 90s. Quote: Originally Posted by 2B This has them eating into their assets at the rate of about $50K per year until one of them dies. *That's what the money is for. * Quote: Originally Posted by 2B I'd rather pay $100,000 over the next 40 years to an insurance company than $1,000,000 to a nursing home over less than 20 years. *I want my money in the bank to encourage vultures visitors and extra benefits. *Even tho my dad was clueless part of the time he knew when he was enjoying the better things in life. Quote: Originally Posted by 2B *If there is only one person, the amount of money needed to supplement their SS and pensions is not going to require many assets to last the rest of their lives. Quote: Originally Posted by 2B You'd be surprised what's not included in the monthly fee. Quote: Originally Posted by 2B Here are the questions for the insured. *How much could your "self insurance" fund grow to if you created a separate account? *What will you do after paying for insurance for 20 years when your renewal raises your payment by 300%? *What will you do after your 2 or 3 year limitation for benefits are all used up? *

If I took the anticipated $100K that I could spend over the next 40 years and put it into real property with 0 cash flow I would still probably have in 30 years enough to pay only 8 years of LTC.

I'm not saying either way is rite but I wonder if our head isn't i the sand on some issues? I think this discussion is great in that it does show different thought processes.

But isn't the question, "we just FIRE at 55 and my spouse just hit by car/stroke/etc. and will spend the rest of life in LTC so how does that impact the FIRE?

[Moderator edit for the presbyopic.]

[REWahoo]

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Originally Posted by 2B Unfortunately, insurance companies and their actuaries know far more about us that we do ourselves.

That is absolutely true in the aggregate. But we know more about our individual health situation than they do, and that knowledge will be a key factor in the decision to keep or drop the policy when the premiums increase.

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Originally Posted by 2B When it comes to renewing, physicals are often required. If you look good, your rates will stay reasonably low but you won't get $100 per month again.

It isn't a renewal, just the end of the premium guarantee period so no physical will be required. I'm not so sure about how good I look , but you are correct that we won't see $100/month again.

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Originally Posted by 2B I suspect you were under 55 to get a 10 year policy. I also suspect you had a physical when you got it.

Yes (52 & DW 51) but once again it is not a 10 year policy, and no.

[unclemick]

Hmmm - dumb question.

If people can now go overseas(Thailand,India,Mexico??) and do medical 'on the cheap' so to speak - is LTC there yet?.

If not - why not?

heh heh heh

[Rich_by_the_Bay]

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Originally Posted by grumpy R-in-T, That is the nature of insurance.

I realize I didn't make myself clear. In the case of LTC of course you hope you never have to use it. But with the whole system so murky just a few years into the future, even if you do have to use it it may well be inadequate or unnecessary or the premiums may rise so fast and high given the uncertainties that you feel you can't afford it, and you stop with nothing to show.

Unlike life insurance where dead is dead, LTC may transform into any number of unpredictable scenarios; carriers may be forced to change terms or premiums just to stay afloat with runaway costs or technologies. If you don't feel like keeping up with them passing these along in the form of skyrocketing premiums, you have lost both future protection and past premium. Uncertainties and risks cannot be avoided, but in this arena, the uncertainties and risks are chaotic and not actuarial.

I don't know that there is any right answer, but I feel likes I'd be playing a game whose rules I don't know and which might change markedly at any time. No thanks.

[Nords]

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Originally Posted by Rich_in_Tampa I'll stick with trying to save the biggest nestegg I can and hope for the best. Big risks either way.

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Originally Posted by grumpy Those premiums won't seriously impact my FIRE lifestyle but the cost of uninsured years in a nursing home for either me or DW would certainly have a very severe impact. Therefore, I gladly pay the premiums.

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Originally Posted by Rich_in_Tampa I don't know that there is any right answer, but I feel likes I'd be playing a game whose rules I don't know and which might change markedly at any time. No thanks.

All excellent points, and a pretty strong incentive to sit on the sidelines for another decade or two...

[samclem]

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Originally Posted by Nords I think that the federal insurance is actually written by John Hancock & Metlife, but that could have changed in the last few years. When I offered my Dad the chance to buy the federal LTC insurance two years ago, it turned out that he had a better deal directly from Hancock.

Right, John Hancock and Metlife still underwrite the federal program. The program for federal employees/military is a huge pot of customers, and what i meant to say is that there are some benefits of being part of that huge pot--the rates can only go up if they raise rates for everyone, and if either of these companies were to pull out of the biz, I think there'd be a big effort to fill the void.

For those interested, here's a link to the federal OPM LTC Insurance Program rate calculator.

https://www.ltcfeds.com/ltcWeb/do/as...needs/ratecalc

Even folks who don't qualify for the federal program might want to see how the rates they've been offered stack up, and how the premiums change if they wait. As we covered in a previous conversation, the "inflation protected" premium plan is a little confusing. If you select "Automatic Compound Inflation Protection" (ACIP) then the premiums never change at all--a 5% annual escalation in the benefit is already built in. If you choose the "future purchase option" (FPO) then every two years you can buy more insurance to keep up with inflation. Here's the catch: Under the FPO plan you'll be buying insurance coverage for somebody who is your present age at that time. This resuts in skyrocketing premiums just when you are most likely to need the coverage. If we do end up buying insurance, I'm sure to buy the ACIP plan. To keep costs low, we'l probably buy just $125 per day coverage for 3 years each. That can be stretched to cover a longer period if we can use less expensive home care. The coverage period might also give the non-incarcerated still healthy spouse a chance to shelter at least some assets and stave off financial ruin while the affected spouse eventually qualifies for Medicaid (I think there's a 3 year lookback period now).

Combined cost for both of us for this minimalist plan is approx $130 per month because we are fairly young. That premium is not supposed to jump. In the future, we'd be paying with inflation-reduced dollars, so the real bite goes down in later years.

Still, $130 every month isn't peanuts--that's a lot of beer and pizza. Given the low-likelihood that we'll need it, I'm very tempted to just assume the risk. But--would I really be taking the risk, or am I passing it to my daughter?

Definitely not an easy decision for us.

[Outtahere]

I've thought about buying LTC for my dh since he's 12 years older than me. I worry that something will happen and he'll wipe out our funds, if we were closer in age and I don't think I'd worry so much.

[honobob]

REWahoo

You've changed my paradigm!* *When I bought my LTC I bought for life.* That was my commitment.* That's usually how I make a decision but it makes you bite off the whole thing at once.* Makes the decision harder.

You've basically made a term life insurance decision for LTC that I had never considered.* So if 10-20 years down the road I don't like the deal or decide that a rental property would serve better use as my LTC backup then I'm free to cancel, or keep the benefits that I locked in at a much younger/better health time.

You've covered yourself during a period when an event, altho unlikely, could have a potentially devastating impact on all your past and future plans.* I'll have to refer to your concept whenever I'm making the big decision.

Grumpy

Very concise post on the nature of insurance.

This is what I enjoy most from this forum.

[jclarksnakes]

....This thread is another one here on the forum that makes me thankful that I am retired military. Tricare For Life covers almost everything related to LTC.
jc

[Nords]

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Originally Posted by jclarksnakes ....This thread is another one here on the forum that makes me thankful that I am retired military. Tricare For Life covers almost everything related to LTC.

JC, that's a research project I haven't started yet and we were already more or less on the self-insure path. However you've piqued my curiousity.

If TFL covers everything related to LTC then why does the federal govt offer their insurance? Is it intended mainly for civil service?

More to the point, do you have a TFL link that explains what LTC they offer? (I've already been traumatized by my visit to Tripler's VA wing and I'm not repeating that process.) You'd think that all of TRICARE's reimbursement cutbacks would have hollowed out any LTC benefits.

[samclem]

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Originally Posted by jclarksnakes ....This thread is another one here on the forum that makes me thankful that I am retired military. Tricare For Life covers almost everything related to LTC. jc

jc,
I wish it were true--but it's not. TFL covers about what Medicare covers, which is almost nothing

From the site of the Army Medical Center at beautiful Ft Hood:
http://www.hood-meddac.army.mil/defa...ths&vi=n&mnu=0


"Myth #8: "TRICARE For Life will pay for long-term nursing care services, so I won't need long-term care insurance."

Reality: TFL does not cover long-term custodial care. Medicare and TRICARE cover certain "medically-necessary" skilled nursing care either in a Skilled Nursing Facility (SNF) or at home. Such services are very different from long-term care services. SNF care may be needed following a period of hospitalization for rehabilitation or for stabilization of a condition. Long-term care, also called "custodial or personal care", is for people who require permanent assistance in activities of daily living, such as eating, bathing, dressing and physical movement. Beneficiaries are solely responsible for paying for custodial services. Beneficiaries desiring such coverage may want to purchase long-term care insurance, but they will have to meet certain "medical underwriting conditions" as determined by an insurance carrier."

[2B]

When my MIL had surgery, USFHP paid for 120 days of skilled nursing care and a few sessions of physical therapy. She's been in a nursing home now for over a year and it is now all out of their pocket. My FIL has Alzheimer's and is in assisted living. There is no USFHP benefit for him either.

I will say USFHP is a fabulous medical benefit. Since DW and I are managing their assets, their medical costs are almost nothing. USFHP appears less flexible than Tricare but it has much lower copays.

For all you ex-military folk, why would you take Tricare over USFHP?

[Alan]

We have LTC insurance but hope to be able to cancel once we have enough money to affectively self insure. We each pay $800/year and took out the policy 5 years ago, but if all goes to plan and we RE in 4 years we should have enough to not need the insurance. We have a couple of young relatives who needed, and may still need nursing home care so we decided a little extra insurance was worth the peace of mind.

[samclem]

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Originally Posted by 2B I will say USFHP is a fabulous medical benefit. Since DW and I are managing their assets, their medical costs are almost nothing. USFHP appears less flexible than Tricare but it has much lower copays. For all you ex-military folk, why would you take Tricare over USFHP?

I'd never heard of USFHP. From the web site, it looks like they primarily cover NY state.

[2B]

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Originally Posted by samclem I'd never heard of USFHP.* From the web site, it looks like they primarily cover NY state.

I think it's for military retirees only and I know it works in Texas.

[Brat]

DH & I purchased LTC (paid up in 10 years couples contract) just before he turned 60, before OPM offered their program.* It is our take that modern medicine often prolongs the dying process - the odds of us needing some kind of care are high.

Here is my take on long term care: about 80% of the residents are women who survived their husbands after caring for him at home.* If you want care options and only can aford to insure one, insure the wife.* The best return on investment is the longer wait period, because you want to insure against depleated assetts.* Always buy the 5% compounded benefit.

The advantages of couples buying young is that if one becomes disabled the spouse won't need to quit work to care for the other.* Frankly, were I a young couple I would buy for both until retirement approached, then drop the husband's policy.* It is my observation that most men fail relatively quickly after needing care.

[honobob]

It is my observation that most men fail relatively quickly after needing care.

As a member of the weaker sex I resemble that remark. Did you stop to think that maybe we just missed our DW's great care and would rather die than put up with inferior care? Are we not the sacraficing/appreciative sex?

Otherwise, Great Post!